(Bloomberg) — US mortgage rates topped 7% last week, reaching the highest level since early May and extending a months-long advance that risks restraining the housing market.
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The contract rate on a 30-year mortgage rose 10 basis points to 7.09% in the week ended Jan. 10, according to Mortgage Bankers Association data released Wednesday. Since late September, home financing costs have increased nearly a full percentage point.
Mortgage rates track US Treasuries, and the 10-year yield on Tuesday advanced to the highest level since October 2023. Borrowing costs have soared since mid-December amid a resilient economy, the prospect of fewer interest-rate cuts by the Federal Reserve and concerns that Trump’s policies will keep inflation elevated.
The combination of high home-financing costs and still-elevated asking prices are weighing on affordability and discouraging potential buyers.
However, MBA’s index applications for home purchases rose nearly 27%, and the refinancing gauge jumped 43.5%. While the figures are adjusted for seasonal effects, they are nonetheless prone to wide swings in weeks around the holidays.
Compared with a year earlier, purchase applications fell 1.8% on an unadjusted basis.
The MBA survey, which has been conducted weekly since 1990, uses responses from mortgage bankers, commercial banks and thrifts. The data cover more than 75% of all retail residential mortgage applications in the US.
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